11.00 Update: BT has unveiled what it is describing as “the UK’s best value deal” for Sky Sports 1 and Sky Sports 2, pricing a single channel at £11.99 (€14.68) and the two channel bundle at a monthly £16.99. The channels can also be purchased individually for £11.99. However the telco’s IPTV platform, BT Vision, faces a loss on every sale after it emerged that BSkyB was planning to introduce an increase in the amount it charges for its own sports bundle.
Through increasing the charges paid by its own subscribers, Sky will trigger a clause in Ofcom’s Wholesale Must Offer (WMO) regulations linking the wholesale rate to the consumer price. Ofcom has today issued a variation to the Schedule covering the WMO, based on a price increase of £3, bringing the retail price for Sky Sports 1 and Sky Sports 2 to £37 (Sky Sports 3 and 4 are ‘bonus channels’). This brings the so-called ‘maximum price’ under the WMO to £13.42 for Sky Sports 1 and £19.07 for Sky Sports 1 and 2, giving BT an instant loss of £1.43 on Sky Sports 1 and £2.08 on every bundle sold.
According to BT its bundle, also including ESPN, works out £205 cheaper than Sky’s current equivalent deal and £281 cheaper than Virgin Media over a 12-month period. The comparison does not take into account the breadth of channels available as part of its competitors’ buythroughs. Unlike Sky and Virgin, BT will not broadcast Sky Sports 3 or Sky Sports 4 and because it uses DTT to deliver its linear channels it will soon also lose Sky Sports News, when Sky moves the channel to pay later this year.
BT research suggests that around 4 million more people in the UK would like to sign up for Sky Sports, but believe it to be too expensive.
“A more competitive market will ensure that customers continue to get the best sport for the sharpest prices and this opening of the market will be in the best interests of customers,” said Gavin Patterson, chief executive of BT Retail.
BT may have already factored in the prospect of an increase in the amount that it pays for Sky Sports – Virgin Media has also concluded its own deal – Sky will be paying more for the now five live Premier League packages it has to offer and it is implausible that it would have absorbed the increased fees.
The telco is already challenging the amount that has been set as the wholesale rate, believing it to be too high, but may have factored in that having access to Sky Sports will help ease the churn that has kept subscriber levels at the half million level.